The Japanese yen fell in Asian trading on Monday against a basket of major and minor currencies, resuming losses that were briefly halted on Friday against the US dollar. The currency is close to touching a two-year low, which sits just one point away from its weakest level since 1986, a move that could prompt Japanese authorities to intensify warnings over excessive foreign-exchange moves or even intervene directly to support the local currency if pressure continues.

Market pricing for a Bank of Japan interest rate hike in July remains weak, leaving investors awaiting further data on developments in the world’s fourth-largest economy for new signals that could lead them to reassess those expectations.

The Price

• Japanese yen exchange rate today: The US dollar rose around 0.1% against the yen to ¥161.86, from an opening level of ¥161.71, after touching an intraday low of ¥161.71.

• The yen ended Friday’s session up 0.1% against the dollar, its first gain in five sessions, as part of a recovery from a two-year low of ¥161.94, which stands just one point away from the 40-year low of ¥161.95.

• The yen lost 0.3% against the dollar last week, marking a second consecutive weekly decline amid renewed concerns over the interest rate gap between Japan and the United States.

US dollar

The US Dollar Index rose around 0.1% on Monday, resuming gains that had paused for two sessions as part of a correction and profit-taking from a 13-month high, reflecting renewed strength in the US currency against a basket of global currencies.

The rise came amid buying of the dollar as the preferred alternative investment, especially after renewed military tensions between the United States and Iran following attacks by Iran’s Revolutionary Guard on several vessels.

Iran war developments

• The United States and Iran have halted hostilities, while navigation through the Strait of Hormuz has resumed following weekend clashes.

• The United States carried out strikes targeting Iranian sites in response to Iran’s Revolutionary Guard targeting several vessels in the Strait of Hormuz.

• Gulf states condemned Iranian missile and drone attacks on Bahrain and Kuwait.

• Israel announced that it had renewed attacks on Hezbollah in southern Lebanon.

• Technical negotiations are scheduled to resume on Tuesday in Doha, with both sides focusing on disputes related to the Strait of Hormuz, particularly freedom of navigation and the mechanism for managing the maritime corridor.

Japanese authorities

Japanese authorities are closely monitoring movements in the currency market, especially as the yen approaches its weakest levels in 40 years after breaching the key ¥160-per-dollar threshold, which is widely viewed as a red line that could prompt renewed intervention to support the currency.

Last week, Japanese Finance Minister Satsuki Katayama held an online meeting with US Treasury Secretary Scott Bessent amid growing concerns over sharp currency volatility.

According to sources cited by Reuters, the meeting focused on proposed policies to address the yen’s historic weakness, including possible intervention in the foreign exchange market.

Katayama stressed that government authorities are fully prepared and ready to take decisive action and intervene directly in the foreign exchange market at any time to protect the yen from speculative moves.

Japanese interest rates

• A summary of opinions from the Bank of Japan’s June monetary policy meeting, published last week, showed that some board members called for additional monetary tightening to move the central bank’s benchmark interest rate toward levels considered neutral for the economy.

• Market pricing for a 25-basis-point rate hike by the Bank of Japan at its July meeting currently remains below 25%.

• To reassess those expectations, investors are awaiting more data on inflation, unemployment, and wage growth in Japan.

XRP was trading near the key psychological support level of $1 at the time of writing on Friday, after losing more than 8% since the start of the week.

Data from CoinGlass showed that more than 97% of leveraged long positions in XRP were liquidated over the past 24 hours, while derivatives market indicators continue to support a bearish outlook for the cryptocurrency.

The technical picture suggests that XRP’s next move will largely depend on whether the critical $1 support level can hold.

More than 97% of long positions wiped out

The broader cryptocurrency market remained under pressure this week, with Bitcoin falling to a new year-to-date low of $58,115 on Thursday, triggering a major wave of liquidations across digital asset markets.

XRP followed Bitcoin’s decline, with CoinGlass data showing leveraged positions worth $44.42 million were liquidated, of which approximately 97.11% were long positions, highlighting an excessive concentration of bullish bets on the token.

Derivatives indicators continue to favor the bears

Derivatives market metrics continue to point toward a negative outlook for XRP.

According to CoinGlass data, XRP’s long-to-short ratio stood at 0.94 on Friday, near its lowest level in more than a month.

A ratio below 1 indicates bearish dominance, suggesting traders are increasingly positioning for further downside.

Funding rates also turned negative on Wednesday and stood at -0.0042% on Friday, meaning short sellers are paying long-position holders. The reading reflects persistent negative sentiment across the market.

Limited signs of optimism emerge

Despite the pressure, some indicators suggest pockets of optimism remain.

According to SoSoValue data, spot XRP exchange-traded funds recorded net inflows of $7.36 million through Thursday this week.

If Friday trading does not produce significant outflows, XRP will be on track to post its eighth consecutive week of net inflows, a streak that began on May 8.

A continuation or acceleration of that trend could provide some support for XRP and help limit further declines.

Inflation and interest rates

The US Personal Consumption Expenditures (PCE) Price Index rose 4.1% in the 12 months through May, matching economists’ expectations in a Reuters poll.

Traders currently assign around a 60% probability to a US interest rate hike in September, down from a previous estimate of 64%, according to CME Group’s FedWatch Tool.

Jim Wyckoff, market analyst at American Gold Exchange, said gold is experiencing a modest rebound after coming under selling pressure earlier this week.

He noted that higher interest rates and tighter monetary policy reduce the appeal of gold as a non-yielding asset, as such conditions typically boost bond yields and increase the attractiveness of income-generating investments.

Oil prices extended their decline on Friday as more tankers exited the strategically important Strait of Hormuz, easing supply concerns despite an attack on a vessel in the Gulf of Oman.

The losses came as investors closely monitored developments in the Middle East and assessed whether recent diplomatic efforts would be sufficient to reduce the risk of disruptions to global energy supply chains.

August Brent crude futures fell 4% to $72.02 a barrel, while August US West Texas Intermediate crude futures declined 3.6% to $69.34 a barrel.

Attack near the Strait of Hormuz revives concerns

A US official told MS NOW that Iran was behind the attack on a cargo vessel near the coast of Oman in the Strait of Hormuz.

The Wall Street Journal reported that the vessel was sailing under the Singapore flag.

The UK Maritime Trade Operations agency said the ship reported no casualties or environmental damage.

Later on Friday, US President Donald Trump said Iran had violated the ceasefire agreement by carrying out drone attacks in the Strait of Hormuz.

“There was damage, but the vessel was able to continue its voyage. We shot down three more drones. This is obviously a foolish violation of the ceasefire agreement,” Trump wrote in a post on Truth Social.

Arsenio Dominguez, Secretary-General of the International Maritime Organization, said: “Following the launch of the IMO evacuation plan, under which a number of vessels were successfully evacuated, we have decided to temporarily suspend the operation to reconfirm that the necessary safety assurances remain available for ships on the evacuation list and for all vessels operating in the region.”

Questions remain over political agreements and future energy supplies

At the same time, tensions in the Middle East remained elevated as disagreements continued between Iran and the United States over the use of funds covered by the memorandum of understanding between the two countries.

Iran’s parliamentary speaker on Thursday rejected claims by the Trump administration that released Iranian assets would be used to purchase US agricultural products.

However, US officials maintained that any funds released would remain subject to US approval.

“As Vice President JD Vance stated this week, if Iranian assets are released, they will be used to purchase American agricultural products to feed the Iranian people,” a US official said.

“There are still many unanswered questions regarding the actual agreement,” said Scott Nations, President of Nations Indexes, during an interview on CNBC’s Squawk Box Asia.

“I think we are more optimistic than we should be because nothing has really been resolved, and Iran knows it has the ability to impact the global economy if it chooses to close the strait,” he added.

A new challenge for OPEC after Iraq dispute

OPEC could also face the possibility of losing another major producer after the United Arab Emirates exited the organization in May.

Reports indicate that Iraq is seeking a higher production quota from OPEC and has informed fellow members that it could withdraw from the group if its demands are not met.

Over the past two decades, the direction seemed clear: major oil companies would gradually evolve into broad-based energy companies. The expectation was that they would use their vast balance sheets, engineering expertise, and global project-management capabilities to build wind farms, solar projects, hydrogen hubs, carbon-capture networks, and renewable energy businesses.

And to some extent, that happened. Major oil companies invested billions of dollars in renewable energy. Parts of the energy sector continue to move in that direction. But among the oil majors themselves, the strategy has become far more selective.

The latest example came from Norway’s Equinor, which recently abandoned its target of building between 10 and 12 gigawatts of renewable energy capacity by 2030.

Instead, the company is shifting toward a broader power-sector strategy that includes renewables, gas-fired generation, storage, and energy trading.

Equinor is not arguing that renewable energy has no future. Rather, it believes that targeting a specific level of renewable capacity no longer aligns with its goal of delivering profitable growth.

That reflects the broader story unfolding across the industry. Oil majors are not stepping back from renewables because the energy transition has stopped. They are doing so because many renewable energy projects have failed to generate the returns investors expect from large oil companies.

Equinor’s strategic shift

Equinor’s decision is particularly significant because the company has been one of the European energy sector’s strongest advocates of offshore wind development. It once positioned itself as a future leader in the sector, but is now recalibrating its ambitions.

The company still expects a substantial increase in electricity production by 2030, but the key metric has shifted from renewable capacity to electricity generation. The business now encompasses gas-fired power generation, storage, and trading alongside renewables.

Equinor also said that only around 10% of its capital expenditure will be allocated to its power business.

The reason is straightforward. Offshore wind projects have become significantly more expensive. Interest rates have risen, supply chains have tightened, equipment costs have increased, and project economics have deteriorated.

In that environment, committing to a fixed capacity target can become a burden, forcing companies to build additional capacity even when expected returns do not justify the capital investment.

Equinor’s revised strategy serves as a reminder that oil companies are not utilities. They do not build renewable capacity simply for the sake of expansion. They allocate capital to businesses where they believe attractive returns can be generated.

BP’s retreat from its green transformation

BP provides perhaps the clearest example of this strategic shift.

It is worth remembering that the company has traveled this road before. More than two decades ago, BP attempted to rebrand itself under the slogan “Beyond Petroleum,” signaling an ambition to become more than an oil and gas producer.

That effort ultimately did not change the company’s core identity. BP remained fundamentally an oil and gas business.

Even so, the slogan highlighted a persistent challenge within the industry: how can a company built on hydrocarbons prepare for a future shaped by changing demand patterns, evolving regulation, and shifting investor expectations?

Under former CEO Bernard Looney, BP launched one of the sector’s most ambitious attempts to answer that question.

The company announced plans to reduce oil and gas production while rapidly expanding its low-carbon energy business. For a time, BP appeared determined to redefine itself faster than many of its peers.

That strategy has now been largely reversed.

BP has increased planned annual investment in oil and gas while cutting spending allocated to the energy transition.

The company has also retreated from earlier plans to reduce hydrocarbon production and is now targeting higher oil and gas output by 2030.

BP recently agreed to sell its US onshore wind business, which includes 10 operating assets.

The message is clear: the company is seeking to rebuild investor confidence by focusing on businesses where it believes returns are stronger and competitive advantages are clearer.

That does not mean BP has abandoned low-carbon energy. It simply no longer appears interested in convincing investors that it should be valued like a high-growth renewable energy company.

Instead, it has returned to the language of cash flow, returns, asset sales, and disciplined capital allocation.

Shell becomes more selective

Shell has followed a similar path, though its retreat has been more selective and less dramatic.

The company has cut jobs in its low-carbon energy division, scaled back parts of its hydrogen strategy, exited certain offshore wind projects, and reviewed strategic options for renewable energy assets in India.

At the same time, it has placed greater emphasis on liquefied natural gas, oil and gas production, and energy trading.

That strategy aligns with Shell’s traditional strengths. The company is one of the world’s largest LNG players, has deep expertise in global energy trading, and possesses extensive experience in large-scale oil and gas developments, shipping, storage, and commodity markets.

Renewable energy is a different business.

Solar and wind projects often resemble infrastructure investments. They can generate stable cash flows, but returns may be compressed by competition, regulation, tax structures, and higher financing costs.

Those projects may be highly attractive to utilities, infrastructure funds, and pension-backed investors, but they do not always satisfy the return expectations of oil-company shareholders.

That is why the idea of a simple transition from “Big Oil” to “Big Renewables” was always somewhat misleading.

Some skills overlap, particularly in areas such as offshore engineering, but the economics are fundamentally different.

TotalEnergies takes a different approach

TotalEnergies stands out as the most prominent example of the opposite strategy.

Unlike some of its competitors, the company has continued building a large and integrated electricity business. It is targeting electricity generation of between 100 and 120 terawatt-hours by 2030, up from 41 terawatt-hours in 2024.

The company has also continued developing renewable energy projects in markets where it already maintains broader energy relationships, including oil and gas investments.

TotalEnergies is not ignoring returns. However, its model may be more disciplined because it is not simply accumulating renewable assets. Instead, it focuses on key markets and divests assets that do not fit its strategy.

That may ultimately prove to be the most successful model for oil majors: not a complete shift from oil into wind and solar, but the construction of an integrated energy platform where electricity, gas, trading, and renewable assets reinforce one another.

In other words, the most successful companies may not be those with the largest renewable energy targets, but those capable of linking generation, customers, storage, trading, and fuel supply within a profitable system.

Renewables are not dead

It is important not to confuse oil majors scaling back parts of their green-energy investments with a collapse of renewable energy itself.

Global investment in clean energy remains enormous. Solar, wind, batteries, power grids, nuclear energy, energy efficiency, and low-emissions fuels continue to attract far more capital than they did a decade ago.

The International Energy Agency estimates that investment in low-emissions energy is currently roughly double the level of investment in fossil fuels.

The conclusion, therefore, is not that the energy transition has failed. Rather, it is proving to be far more complex than many early projections suggested.

Renewables are growing, but ownership structures, capital costs, support mechanisms, electricity pricing, grid connection queues, and supply chains all matter.

Publicly listed oil companies must also answer to shareholders.

A renewable project that works well for a regulated utility or infrastructure fund may not necessarily fit an oil major competing for capital against deepwater oil developments, LNG projects, refining operations, petrochemical investments, or share buybacks.

Why did the green transition stumble for oil majors?

Oil companies entered the renewable energy sector with genuine advantages: massive balance sheets, engineering expertise, project-management capabilities, and political relationships.

But they also faced real disadvantages.

Renewable energy projects often operate with lower margins. A high-quality solar or wind project can be attractive, but it may not deliver the same returns as a successful oil and gas development.

Renewable projects are also more sensitive to interest rates. When rates were near zero, the long-term cash flows generated by infrastructure assets looked highly attractive. As rates increased, the economics changed.

Competition has intensified as well.

Oil companies are not the only organizations with access to capital. Utilities, private equity firms, pension funds, infrastructure investors, and specialist renewable developers all compete for the same projects.

Finally, oil companies are valued by investors who often prioritize cash returns, dividends, share buybacks, and spending discipline.

Those investors may not reward a company simply for building renewable energy capacity.

The bigger picture

The retreat by some oil majors from renewable energy is not a story about the failure of green energy. It is a story about the return of capital-allocation discipline.

The energy transition continues, but it is unlikely to take the form of oil companies simply replacing themselves with renewable divisions.

Some oil majors will build substantial electricity businesses. Others will focus on LNG, trading, carbon capture, hydrogen, and biofuels.

Still others will remain closer to their traditional strengths.

That may disappoint those who expected oil companies to lead the transition, but it should not surprise anyone familiar with how capital is allocated.

Companies generally move toward businesses where they possess a competitive advantage and can generate acceptable returns.

For most oil majors, that still means a heavy focus on oil, natural gas, and LNG.

In the power sector, it may mean selective participation rather than an all-in commitment to renewable capacity.

That is the tension shaping oil-major strategy today: they are not abandoning the future, but they have become much more selective about which parts of the future they want to own.